COLLECTION OF FEE FOR TRANSPORT ALLOWANCE WITHOUT PROPER RECEIPT (ETHICS)

The procedural requirement for travel allowance is provided in Section 10 of Rule 141. In this case, not only did Ms. Pilapil grossly ignore the procedural requirement in the collection and disbursement of travel allowance, she also failed to issue an official receipt for the amount she collected. This violated the Supreme Court circular for proper accounting and control of revenues.

We agree with the findings of the OCa that the explanation of Ms. Pilapil for her failure to issue an official receipt for the transportation allowance she collected and received from Atty. Lawas is inadequate and does not justify her disregard of the above requirements.

Ms. Pilapil, as Clerk of Court and as custodian of the court's funds and revenues among others, performs a very delicate function. She assumes a high degree of responsibility relative to these funds, and is accountable not only to the courts but to the litigants and their counsels as well. Her act of collecting some amount for transportation allowance in violation of Section 10 of Rule 141 of the Rules of Court and her failure to issue an official receipt in violation of the said SC circular are matters which this Court cannot tolerate.

Her assertion of good faith cannot override the mandatory nature of the above requirements essentially designed to promote full accountability for governmental funds.

the acts complained of against Ms. Pilapil having a direct relation to, and being connected with the performance of her official duties, constitute MISCONDUCT. Misconduct is defined as a transgression of some established and definite rule of action. For her violation of said provisions, Ms. Pilapil should be held liable for simple misconduct.

CHAN V. SECRETARY OF JUSTICE (REMEDIAL, CRIMINAL)

Contrary to petitioner's view, Crespo subsists and was not superseded by Allado.

Allado, which was punctuated by inordinate eagerness in the gathering of evidence and in the preliminary investigation, serves as an exception ans may not be invoked unless similar circumstances are clearly shown to exist. No such cinrcums tances were established in the present case.

In Crespo, the Court laid down the rule that once an Information is filed in court, any disposition of the cases rests on the sound discretion of the court. In subsequent cases, the Court clarified that Crespo does not bar the Justice Secretary from reviewing the findings of the investigating prosecutor in the exercise of his power on control over his subordinates. The Justice Secretary is merely advised , as far as practicable, to refrain from entertaining a petition for review of the prosecutor's findings when the Information is already filed in court. In other words, the power or authority of the Justice Secretary to review the prosecutor's findings subsists even after the Information is filed in court. The court, however, is not bound by the Resolution of the Justice Secretary, but must evaluate it before proceeding with the trial. While the ruling of the Justice Secretary is persuasive, it is not binding on courts.

Albeit the findings of the Justice Secretary are not absolute ans are subject to judicial review, this Court generally adheres to the policy of non-interference in the conduct of preliminary investigations, particularly when the said findings are well-supported by the facts as established by the evidence on record.

Absent any showing of arbitrariness on the part of the prosecutor or any other officer authorized to conduct preliminary investigation, courts as a rule must defer to said officer's findings and determination of probable cause, since the determination of the existence of probable cause is the function of the prosecutor. Simply stated, findings of the Secretary of Justice are not subject to review, unless made with grave abuse of discretion.

Thus, the findings of the Justice Secretary may be reviewed through a petition for certiorari under Rule 65 based on the allegation that he acted with grave abuse of discretion. This remedy is available to the aggrieved party.

In the petition for certiorari, the CA is not being asked to cause the dismissal of the case in the trial court, but only to resolve the issue of whether the Justice Secretary acted with grave abuse of discretion in affirming the finding of probable case by the investigating prosecutor. Should it determine that the Justice Secretary acted with grave abuse of discretion, it could nullify his resolution and direct the State Prosecutor to withdraw the Information by filing the appropriate motion with the trial court. But the rule stands - the decision whether to dismiss the case or not rests in the sound discretion of the trial court where the Information was filed.

The CA likewise, opined that the filing of the petition for certiorari was improper since petitioner still had an available remedy - to file a motion to dismiss or to quash the Information with the trial court. We do not agree. A petition for certiorari may still be availed of even if there is an available remedy, when such remedy does not appear to be plain, speedy, and adequate in the ordinary course of law.

We hold that the Secretary of Justice did not commit grave abuse of discretion in affirming the finding of probable cause by the State Prosecutor.

Probable cause is the existence of such facts and circumstances as would lead a person of ordinary caution and prudence to entertain an honest and strong suspicion that the person charged is guilty of the crime subject of the investigation. Being based merely on opinion and reasonable belief, it does not import absolute certainty. Probable cause need not be based on clear and convincing evidence of guilt, as the investigating officer acts upon reasonable belief. Probable cause implies probability of guilt and requires more than base suspicion but less than evidence which would justify a conviction.

In the case at bench, petitioner is charges with illegal sale of a prohibited drug. A successful prosecution of this offense requires the concurrence of the following elements:

1. the identity of the buyer and the seller, the object of the sale, and the consideration; and
2. the delivery of the thing sold and payment therefor.

To our mind, the ducumentary and object evidence submitted to the State Prosecutor, particularly the Joint Affidavit of Arrest, the 935.80 grams of shabu, the buy-bust money sufficiently establish the existence of probable cause against petitioner for the crime charged. After all, a finding of probable cause needs only to rest on evidence showing that more likely than not, a crime has been committed by the suspect.

Unless there is a clear and convincing evidence that the members of the buy-bust team were impelled by an improper motive, or were not properly performing their duties, their testimonies on the operation deserve full faith and credit.

The allegation that the State Prosecutor was not impartial in conducting the preliminary investigation is merely speculative - a bare allegation unworthy of credence. Such accusation is worthless in light of our finding that there is indeed, probable cause against petitioner.

Petitioner's allegation of frameup and extortion is evidentiary in nature, and are matters for his defense. Evidentiary matters must be presented and heard during the trial. But the defense of frameup in drug cases requires strong and convincing evidence because of the presumption that the police officers performed their duties regularly and that they acted within the bounds of their authority. Besides, the defense of denial or frameup, like alibi, is viewed with disfavor for it can just as easily be concocted and is a common and standard defense ploy in most prosecutions for violation of the Dangerous Drugs Act.

We recognize the courts' authority to grant bail in cases involving capital offenses after a determination that evidence of guilt is not strong. But we urge them to be circumspect in exercising such discretion. In this case, it is glaring that the bail bond fixed by the RTC was exceedingly low considering that the crime charged is legal sale of prohibited drug punishable by Reclusion Perpetua to Death and a fine ranging from PHP500,000 to PHP10 million, with the risk of flight extremely high, the petitioner being a Chinese citizen.

CAMITAN V. FIDELITY INVESTMENT (REMEDIAL)

The records show that counsel for petitioners made a judicial admission and failed to refute that admission during the said proceedings despite the opportunity to do so. A JUDICIAL ADMISSION is an admission, verbal or written, made by a party in the course of the proceedings in the same case, which dispenses with the need for proof with respect to the matter or fact admitted. It may be contradicted only by a showing that it was made through palpable mistake or that no such admission was made.

Petitioners explicate that the wrong admission was an honest mistake and negligence attributable to the counsel's nervousness and excitement in appearing for the first time before the CA. However, as correctly pointed out by the CA, such an admission may only be refuted upon a proper showing of palpable mistake or that no such admission was made. Thus, the claim of honest mistake and negligence on the part of the counsel did not suffice.

There was ample opportunity for petitioners; counsel to examine the document, retract his admission, and point out the alleged discrepancies. But he chose not to contest the document. Thus, it cannot be said that the admission of the counsel was made through palpable mistake.

Every counsel has the implied authority to do all acts which are necessary or incidental to the prosecution and management of the suit in behalf on his client Any act performed by counsel within the scope of his general and implied authority is, in the eyes of law, regarded as the act of the client himself.

Consequently, the mistake or negligence of the counsel, which may result in the rendition of an unfavorable judgment, generally binds the client. To rule otherwise would encourage every defeated party, in order to salvage his case, to claim neglect or mistake on the part of his counsel. Then, there would be no end to litigation, as every shortcoming of counsel could be the subject of challenge by his client through another counsel who, is he is also found wanting, would likewise be disowned by the same client through another counsel ans so on, as infinitum.

This rule admits of exceptions, i.e., where the counsel's mistake is so great and serious that the client is deprived of his day in court or of his property without due process of law. In these cases, the client is not bound by his counsel's mistakes and the case may even be reopened in order to give the client another chance to present his case. In the case at bar, however, these exceptional circumstances do not obtain.

BENGUET V. CABILDO (REMEDIAL, CIVIL)

It is a well-entrenched doctrine that factual findings of the trial court, especially when affirmed by the appellate court, are accorded the highest degree of respect and are conclusive between the parties and even the courts. Nonetheless, jurisprudence recognizes highly meritorious exceptions such as:

1. when the findings of a trial court are grounded entirely on speculations, surmises, or conjectures;
2. when a lower court's inference from its factual findings is manifestly mistaken, absurd, or impossible;
3. when there is grave abuse of discretion in the appreciation of facts;
4. when the findings of the appellate court go beyond the issues of the case or fail to notice relevant facts which, if properly considered, will justify a different conclusion;
5. when there is a misappreciation of facts; and
6. when the findings of facts are conclusions without mention of the specific evidence on which they are based, are premised, on the absence of evidence, or are contradicted by evidence on record.

It is noteworthy that none of these exceptions which would warrant a reversal of the assailed decision obtains herein.

The SC rejects petitioners' contention that there is an apparent conflict between the wording of the contract and the actual intention of the parties on the specific object of the painting job.

Article 1370 of the Civil Code provides: If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control.

If the words appear to be contrary to the evident intention of the parties, the latter shall prevail over the former.

The cardinal rule in the interpretation of contracts embodied in the above rule is akin to the Plain Meaning Rule applied by Pennsylvania courts, which assumes that the intent of the parties to an instrument is embodied in the writing itself, and when the words are clear and unambiguous, the intent is to be discovered only from the express language of the agreement.

It also resembles the Four Corners Rule, a principle which allows courts in some cases to search beneath the semantic surface for clues to meaning. A court's purpose in examining a contract is to interpret the intent of the contracting parties, as objectively manifested by them. The process of interpreting a contract requires the court to make a preliminary inquiry as to whether the contract before it is ambiguous.

A contract provision is ambiguous if it is susceptible of two reasonable alternative interpretations. Where the written terms of the contract are not ambiguous and can only be read one way, the court will interpret the contract as a matter of law. If the contract is determined to be ambiguous, then the interpretation of the contract is left to the court, to resolve the ambiguity in the light of the intrinsic evidence.

In the case at bench. the Contract of Work leaves no room for equivocation or interpretation as to the exact intention of the parties. We also note that Benguet's counsel drafted and prepared the contract. Undoubtedly, petitioners' claimed ambiguity cannot give rise to an interpretation favorable to Benguet.

Article 1377 of the Civil Code provides: The interpretation of obscure words or stipulations in a co tract shall not favor the party who caused the ambiguity.

It is crystal clear that petitioners breached the Contract of Work with Cabildo by awarding Velasco a contract covering the same subject matter, quite understandably, because Velasco offered a price schedule lower than Cabildo's. We completely agree with the uniform findings of the lower courts that the petitioners waylaid Cabildo and prevented him from performing his obligation under the Contract of Work.

ASSOCIATED BANK V. PRONSTROLLER (REMEDIAL, COMMERCIAL)

Well-settled is the rule that the findings of the RTC, as affirmed by the CA, are binding on the SC. In a petition for review on certiorari under Rule 45, as in this case, this Court may not review the findings of fact all over again. This Court is not a trier of cats, and it is not its function to reexamine and weigh anew the respective evidence of the parties. The findings of the CA are conclusive on the parties and carry oven more weight when these coincide with the factual findings of the trial court, unless the factual findings are not supported by the evidence on record. Petitioner failed to show why the above doctrine should not be applied to the instant case.

The general rule is that, in the absence of authority from the Board of Directors, no person, not even its officers, can validly bind a corporation. The power and responsibility to decide whether the corporation should enter into a contract that will bind the corporation is lodged in the Board of Directors. However, just as a natural person may authorize another to do certain acts for and on his behalf, the Board may validly delegate some of its functions and powers to officers, committees, and agents. The authority of such individuals to bind the corporation is generally derived from law, corporate bylaws, or authorization from the Board, wither expressly or impliedly, by habit, custom, or acquiescence, in the general course of business.

The authority of a corporate officer or agent in dealing with third persons may be actual or apparent. The doctrine of Apparent Authority with special reference to banks, had long been recognized in this jurisdiction. apparent authority is derived not merely from practice. Its existence may be ascertained through

• the general manner in which the corporation holds out an officer or agent as having the power to act, or in other words, the apparent authority to act in general, with which it clothes his; or
• the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, within or beyond the scope of his ordinary powers.

Accordingly, the authority to act for and to bind a corporation may be presumed from acts of recognition in other instances, wherein the power was exercised without any objection from its board or shareholders. Undoubtedly, petitioner had previously allowed Atty. Soluta to enter into the first agreement without a board resolution expressly authorizing him; thus, it had clothed him with apparent authority to modify the same via the second letter-agreement. It is not the quantity of similar acts which establishes apparent authority, but the vesting of a corporate officer with the power to bind the corporation.

Naturally, the third person has little or no information as to what occurs in corporate meetings; and he must necessarily rely upon the external manifestations of corporate consent. The integrity of commercial transactions can only be maintained by holding the corporation strictly to the liability fixed upon it by its agents in accordance with law. What transpires in the corporate board room is entirely an internal matter. Hence, petitioner may not impute negligence on the part of the respondents in failing to find out the scope of Atty. Soluta's authority. Indeed, the public has the right to rely on the trustworthiness of bank officers and their acts.

AFP MUTUAL BENEFIT ASSOCIATION V. SANTIAGO (REMEDIAL, CIVIL)

The NOTICE OF LEVY ON ATTACHMENT in favor of petitioner may be annotated on the title. Levin v. Bass provided the distinction between voluntary registration and involuntary registration.

In Voluntary Registration, such as sale, mortgage, lease, etc, if the owner's duplicate certificate be not surrendered and presented or if no payment of registration fees be made within 15 days, entry in the day book of the deed of sale does not operate to convey and affect the land sold.

In Involuntary Registration, such as an attachment, levy upon execution, lis pendens, etc, entry thereof in the day book is a sufficient notice to all persons of such adverse claim.

Under the Property Registration Decree (PD 1529), the act of registration is the operative act to convey or affect the land insofar as third persons are concerned. Constructive notice is also created upon registration or every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument, or entry affecting registered land.

In this case, the preference created by the levy on attachment is not diminished by the subsequent registration of the prior sale to respondent. The attachment that was registered before the sale takes precedence over the latter. Superiority and preference in rights are given to the registration of the levy on attachment; although the notice of attachment has not been noted on the certificate of title, its notation in the book of entry of the Register of Deeds produces all the effects which the law gives to its registration or inscription.

Respondent cannot be considered an innocent purchaser for value. Under the rule of notice, it is presumed that the purchaser has examined every instrument of record affecting the title. Such presumption is irrebutable. He is presumed to know every fact shown by the record and to know every fact which an examination of the record would have disclosed. This presumption cannot be overcome by proof of good faith or innocence. Otherwise, the very purpose and object of the law requiring a record would be destroyed.

The rule that all persons must take notice of the facts which the public record contains is a rule of law. The rule must be absolute; any variation would lead to endless confusion and useless litigation. For these reasons, a declaration from the court that respondent was in bad faith is not necessary in order that the notice of levy on attachment may be annotated on the title.

The fact that the notice of levy on attachment was not annotated on the original title on file in the Register of Deeds, which resulted in its non-annotation on the title, should not prejudice petitioner. As long as the requisites required by law in order to effect attachment are complied with and the appropriate fees duly paid, attachment is duly perfected. The attachment already binds the land. This is because what remains to be done lies not within the petitioner's power to perform but is a duty incumbent solely on the Register of Deeds.

In this case, since the respondent refuses to surrender the owner's duplicate certificate so that the attachment lien may be annotated, a court order is necessary in order to compel the respondent to surrender her title. As a rule, the functions of the Register of Deeds are generally regarded as ministerial and said officer has no power to pass upon the legality of an order issued by a court of justice.

ABADIANO V. MARTIR (REMEDIAL)

It is well settled that the findings of fact of the trial court, especially when affirmed by the CA, are accorded the highest degree of respect, and generally will not be disturbed on appeal. such findings are binding and conclusive on the Court. The jurisdiction of the Court is limited only to review of ERRORS OF LAW, unless the case falls under the recognized exceptions, namely:

1. when the findings are grounded entirely on speculation, surmises, or conjectures;
2. when the inference made is manifestly mistaken, absurd, or impossible;
3. when there is grave abuse of discretion;
4. when the judgment is based of a misapprehension of facts;
5. when the findings of fact are conflicting;
6. when in making its findings, the CA went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee;
7. when the findings are contrary to those of the trial court;
8. when the findings are conclusions without citation of specific evidence on which they are based;
9. when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent; and
10. when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record.

In the present case, we find that the trial court based its judgment on a misapprehension of facts, as well as on the supposed absence of evidence which is contradicted by the records.

Considering that the action is one for quieting of title and respondents anchored their claim to the property on the disputed Compra Y Venta, we find it necessary to say that it was incumbent upon the trial court to have resolved first the issue of the document's due execution and authenticity before determining its validity.

Respondents attached only a photocopy of the Compra Y Venta to their complaint and alleged that the original of said document was in the Register of Deeds, that they tried to obtain a copy but was refused. No other evidence but these assertions were presented.

The Rule states that when the original document is unavailable, has been lost or destroyed, or cannot be produces in court, the offeror, upon proof of its execution or existence and the cause of its unavailability without bad faith on his part, may prove its contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of witnesses in the order stated.

In the case at bar, respondents failed to establish that the offer in evidence of the document was made in accordance with any of the exceptions allowed under the Rule, and yet the trial court accepted the document as genuine and proceeded to determine its validity based on such assumption.

The trial court likewise brushed aside the apparent defect that the document presented contained the same notarial inscription as the Agreement on Partition. We stress that a notarial document is evidence of the facts in the clear unequivocal manner therein expressed and has in its favor the presumption of regularity.

In this case, while it is true that the error in the notarial inscription would not have invalidated the sale - if indeed it took place - the same error would have meant that the document cannot be treated as a notarial document and thus, not entitled to the presumption of regularity. The document would be taken out of the realm of the public documents whose genuineness and due execution need not be proved.

Under the Property Registration Decree, no title to register land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession. Indefeasibility and imprescriptibility are the cornerstones of land registration proceedigns. Barring any mistake or use of fraud in the procurement of title, owners may rest secure on their ownership and possession once their title is registered under the protective mantle on the Torrens system.

Nonetheless, even if a Torrens title is indefeasible and imprescriptible, the registered landowner may lose his right to recover the possession of his registered property by reason of laches.

The four basic elements of laches are:

1. conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation of which complaint is made and for which the complaint seeks a remedy;
2. delay on asserting the complainant's rights, the complainant having had knowledge or notice of the defendant's conduct and having been afforded an opportunity to institute suit; lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and
3. injury or prejudice to the defendant in the event relief is accorded to the complainant or the suit is not held to be barred.

The reason for the rule is not simply the lapse of time during which the neglect to enforce the right has existed, but the changes of condition which may have arisen during the period in which there has been neglect.

Though laches applies even to imprescriptible actions, its elements must be proved positively. Laches is evidentiary in nature and cannot be established by mere allegations in the pleadings.

Based on the foregoing, we hold that petitioner is not guilty of laches. The evidence on record does not support such finding.

Petitioner had reasonable ground to believe that the property, being still in the name of his predecessor-in-interest, continued to be theirs, especially considering that the annotation of the purported sale was done only in 1982. According to petitioner, his father had told him that his inheritance was in the possession of their uncle, who knew likewise that the property was theirs.

That the petitioner and his co-heirs waited until the death of said uncle to try and occupy the land is understandable. They had to be careful about the actions they took, lest they sow dissent within the family. Further, they knew that their parents revered the uncle.

The Court has recognized that this reaction cannot be characterized as such delay as would amount to laches.

In sum, we find that petitioner is not guilty of such neglect or inaction as would bar his claim to the property in question. In contrast, it is most telling that respondents, who are claiming to have been in possession of the property by virtue of an alleged duly constituted sale for almost 60 years. have themselves failed within that long period to have the same property transferred in their name or even only to have the sale annotated on the title of the property.

SHOPPES MANILA V. NLRC (LABOR)

FACTS: Buan and Torno were employees of Shoppes Manila. They were charged with stealing items and subsequently suspended then dismissed.

HELD: In order to effect a valid dismissal, the law requires that

1. there be just or valid cause as provided under Article 282 of the Labor Code; and
2. the employee be afforded an opportunity to be heard and to defend himself.

The petitioner had failed to show that it had complained with the TWO-NOTICE REQUIREMENT:

1. a written notice containing a statement of the cause for the termination to afford the employee amply opportunity to be heard and defend himself with the assistance of his representative; and
2. if the employer decides to terminate the services of the employee, the employer must notify him in writing of the decision to dismiss him, stating clearly the reason therefor.

MAGOS V. NLRC (LABOR)

FACTS: Magos is a manager of Pepsi in Surigao. One supplier complained that Magos was supplying in a different area despite agreement on the matter to which Magos countered that it was necessary as sales were down. Magos was later terminated.

HELD: What is most important is that before termination, employee must be given the twin requirements of due process proper notice and hearing. The essence of due process is that a party be afforded a reasonable opportunity to be heard and to submit any evidence he may have in support of his defense. Even though petitioner in this case never admitted the accusations of dishonesty against him, he impliedly acknowledged his insubordination as shown in his petition.

CAINGAT V. NLRC (LABOR)

FACTS: Petitioner became the General Manager of Sta Lucia Realty and was discovered to have deposited company funds in his personal account and used such funds to pay his credit card purchases and trips abroad. Without conducting any investigation, company filed a complaint while petitioner filed a complaint for illegal dismissal.

HELD: While the dismissal may be truly justified by loss of confidence, management failed to observe fully the procedural requirement of due process for the termination of petitioner's employment.

Employer sent only one notice, no other notice was sent. Neither the public notice in the Phil Daily Inquirer, a newspaper could constitute substantial compliance. What the public notice did was to inform the public that petitioner was already separated as of June 20, 1996, the same day he was suspended.

STA CATALINA COLLEGE V. NLRC (LABOR)

FACTS: Hilaria was hired as an elementary teacher in petitioner school in 1955 until 1970. In 1970, she applied for and was granted 1 year leave of absence without pay on account of her mother's illness. In the meantime, she was employed as a teacher in another school. In 1982, she applied anew at petitioner school. When she reached the compulsory retirement age of 65, petitioner school pegged her retirement benefits only from her service from 1982 to 1997. Hilaria then files a complaint for non-payment of retirement benefits.

HELD: HILARIA ABANDONED HER WORK, for which reason, she could not be credited for her services from 1955 to 1970 in determining her retirements benefits for after 1 year of leave of absence in 1971 without her requesting for extension thereof as in fact she had not been heard from until she resurfaces in 1982 when she reapplied, she abandoned her teaching position as in fact she was employed elsewhere and effectively relinquished the retirement benefits that accumulated during said period.

ABANDONMENT OF WORK being a just cause for terminating the services of Hilaria, petitioner school was under no obligation to serve a written notice to her.

SUNDOWNER DEVELOPMENT V. DRILON (LABOR)

FACTS: Hotel Mabuhay leased the premises belonging to Syjuco. However, due to non-payment of rentals, a case for ejectment was filed and Hotel Mabuhay offered to amicably settle by surrendering the premises and to sell its assets and property to any interested party, to which Syjuco acceded.

HELD: The absorption of the employees of Hotel Mabuhay may not be imposed on Sundowner, who has no liability whatsoever to the employees of Hotel Mabuhay and its responsibility if at all, is only to consider them for re-employment in the operation of the business in the same premises. There can be no implied acceptance of the employees of Hotel Mabuhay by petitioner as it is expressly provided in the agreement that petitioner has no commitment or duty to absorb them.

The rule is that unless expressly assumed. labor contracts such as employment contracts and CBAs are not enforceable against a transferee of an enterprise, labor contracts being IN PERSONAM, thus, binding only between the parties. A labor contract merely creates an action in personam and does not create an real right which should be respected by third parties. This conclusion draws its force from the right of an employer to select his employees and to decide when to engage them as protected under our Constitution and the same can only be restricted by law through the exercise of police power.

As a general rule, there is no law requiring a bona fide purchaser of assets of an on-going concern to absorb in its employ the employees of the latter. However, although the purchaser is not legally bound to absorb in its employ the employees of the seller, the parties are liable to the employees if the transaction between is clothed with bad faith.

PIDO V. NLRC (LABOR)

FACTS: Pido, an employee of Cherubim Security was suspended which eventually led to his illegal dismissal.

HELD: There was indeed CONSTRUCTIVE DISMISSAL. His prolonged suspension, owing to respondent's neglect to conclude the investigation had ripened to constructive dismissal. His filing of a complaint for constructive dismissal, along with a prayer for reinstatement clearly indicates that he did not abandon his work.

Verily, the floating status requires the dire exigency of the employer's bona fide suspension of operation of a business or undertaking. In security services, this happens when the security agency's clients which do not renew their contracts are more than those that do and the ones that the agency gets. Also, in instances when contracts for security services stipulate that the client may request the agency for the replacement of the guards assigned to it even for want of cause, the replaced security guard may be placed on temporary off-detail if there are no available posts under respondent's existing contracts.

When a security guard is placed on a floating status, he does not receive any salary or financial benefit provided by law. Due to the grim economic consequences to the employee, the employer should bear the burden of proving that there are no posts available to which the employees temporarily out of work can be assigned.

DANZAS INTERNATIONAL V. DAGUMAN (LABOR)

FACTS: Petitioners aver that they were compelled to close the company's brokerage department, to which losses were alleged traceable due to incorrect handling of sales, in order to prevent further losses which threatened the company's viability. Essentially, petitioners invoke a blend of retrenchment to prevent losses and closure of a section of the company's business to justify the termination of private respondents.

HELD: UNJUSTIFIED TERMINATION, either as retrenchment to prevent losses because petitioners' evidence to prove business losses or closure of the establishment because the brokerage department did not actually cease operations.

The condition of business losses justifying retrenchment is normally shown by audited financial documents as well as annual income tax returns. Financial statements must be prepared and signed by independent auditors otherwise, they may be assailed as self-serving. Parenthetically, if the business losses that justify the closure of the establishment are duly proved, the right of affected employees to separation pay is lost for obvious reasons. Otherwise, the employer closing his business is obligated to pay his employees their separation pay.

SAN MIGUEL JEEPNEY SERVICE V. NLRC (LABOR)

FACTS: San Miguel had a contract with the US Naval Base in Zambales to provide transportation services to personnel and dependents inside the base facility. When said contract expired, San Miguel opted not to renew the existing contract nor bid on the new contract due to financial difficulties, it having suffered a net loss the previous year. As a consequence, the services of the complainants were terminated.

HELD: Apparently, San Miguel did not renew its contract because of sliding incomes and not because of serious business losses, thus, it cannot justify the non-payment of separation pay.

As San Miguel admitted, what they suffered were sliding incomes in other words, decreasing revenues. What the law speaks of is serious business losses or financial reverses. Clearly, sliding incomes are not necessarily losses, much less serious business losses within the meaning of the law.

PHILIPPINE CARPET V. STO TOMAS (LABOR)

FACTS: A Memorandum was issued informing all employees that a comprehensive cost reduction program would be implemented by the corporation "on account of depressed business conditions brought about by currency crisis and the 9/11 incident." After the retrenchment program was implemented, more than 200 new workers were hired, including some who have been retrenched, and some were promoted.

HELD: The corporation failed to adduce clear and convincing evidence to prove the confluence of the essential requisites for a valid retrenchment of its employees. It acted in bad faith in terminating the employment of the members of the union.

The requirements are:

1. that the retrenchment is reasonably necessary and likely to prevent business losses which if already incurred, are not merely de minimis, but substantial, serious, actual, and real or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;
2. that the employer served written notice both to the employees and DOLE at least 1 month prior to the intended date of retrenchment;
3. that the employer pays the retrenched employees separation pay for every year of service, whichever is higher;
4. that the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent employees' right to security of tenure; and
5. that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.

TIERRA INTERNATIONAL V. NLRC (LABOR)

FACTS: Olivar, a shift supervisor for shipping company was dismissed from service and repatriated to the Philippines 6 months before his contract expired. Ground for dismissal: promotion of economy, efficiency, and profitability in operations and reduction of personnel whose positions are redundant or surplusage and/or reassignment of personnel to other available useful positions.

ISSUE: Was the termination of Olivar for just and valid cause:

HELD: YES. Olivar's position was deleted due to a decrease in scope of work assigned to the company. Unfortunately, there were no other available positions for which he could qualify. Other positions were also abolished, showing that he was not singled out and his termination was not arbitrary or malicious.

Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous and superfluity of a position may be the outcome of a number of factors such as overhiring or workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.

The law does not make any distinction between a technical and non-technical position for purposes of determining the validity of termination due to redundancy. Neither does the law nor the employment contract here involved require that junior employees should first be terminated. In redundancy, what is looked into is the position itself, the nature of the services performed by the employee, and the necessity of such position.

LOPEZ SUGAR CORP V. FRANCO (LABOR)

FACTS: Lopez Sugar issued a Memorandum for the adoption of a special retirement program for selected supervisory and middle-level managers, allegedly due to over-staffing and duplication of functions. Private respondents, all supervisory employees who organized a labor union which was currently undergoing CBA negotiations with Lopez Sugar were included in its coverage and terminated from employment.

ISSUE: Was the termination of respondents by virtue of the special retirement program valid?

HELD: NO. The corporation illegally dismissed the private respondents by including them in its special retirement program, this debilitating the union, rendering it pliant by decapacitating its leadership. No standards, criteria, or guidelines for the selection of the employees to be dismisses were made known to them, and all they were told was that they had been selected for termination.

ESCAREAL V. NLRC (LABOR)

FACTS: Escareal's position as Pollution Control and Safety Manager was declared redundant.

HELD: Dismissal was illegal. PRC had no valid and acceptable basis to declare the position redundant.

If the aim was to generate savings in terms of the salaries that PRC would not be paying the employee anymore as a result of the streamlining of operations for improved efficiency, such move could hardly be justified in the face of PRC's hiring of fresh graduates for various positions. Besides, there would seem no compelling reason to save money by removing such an important position. As shown by their recent financial statements, PRC's net profits have steadily increased.

While concededly, Article 283 of the Labor Code does not require that the employer should be suffering financial losses before it could terminate the services of an employee on the ground of redundancy, it does not mean wither that a company which is doing well can effect such a dismissal whimsically or capriciously.

The position of Pollution Control and Safety Manager is required by law. Thus, it cannot be said that the services of employee are in excess of what is reasonably required by the enterprise.
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SORIANO V. NLRC (LABOR)

FACTS: PLDT utilized high technology equipment in its operations such as computers and digital switches which necessarily resulted in the reduction of the demand for the services of a switchman.

HELD: Dismissal was valid. PLDT submitted the relevant documents attesting redundancy of employing switchmen and it has also paid separation pay to the dismisses workers.

PLDT as employer, has the recognized right and prerogative to select persons to be hired and to designate the work as well as the employees to perform it. This includes the right of PLDT to determine the employees to be retained or discharged and who among the applicants are qualified and competent for a vacant position. The rationale for this principle is that PLDT is in the best position to ascertain what is proper for the advancement of its business interest. Thus, this Court cannot interfere with the wisdom and soundness of PLDT's decision as to who among the switchmen should be retained or discharged or who should be transferred to vacant positions, as long as such was made in good faith and not for the purpose of curbing the rights of the employees.

ASUFRIN V. SAN MIGUEL (LABOR)

FACTS: An illegal dismissal case which stemmed from SMC's new marketing system known as pre-selling scheme. As a consequence, all positions of route sales and warehouse personnel were declared redundant.

HELD: Dismissal was invalid. In selecting employees to be dismissed, a fair and reasonable criteria must be used such as but not limited to

1. less preferred status (e.g., temporary employee);
2. efficiency; and
3. seniority.

In the case at bar, no criterion whatsoever was adopted by the employee. Furthermore, SMC has not shown how the cessation of the employees' services would contribute to the ways and means of improving efficiency and cutting distribution overhead and other related costs.

In other words, it is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof that such is the actual situation to justify the dismissal of the affected employees for redundancy.

WILTSHIRE FILE V. NLRC (LABOR)

FACTS: Ong was dismissed because of serious business losses. In the termination letter, the ground alleged was redundancy of the position. Ong countered that there could be no redundancy because nobody except him in the company was then performing the same duties.

HELD: Dismissal was valid. The losses were proven by the company and most importantly, company finally closed its doors and terminated all its operations. SC considered that finally shutting down business operations constitutes strong confirmatory evidence of financial distress.

REDUNDANCY exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. That no other person was holding the same position that employee held does not show that his position had not become redundant.

The characterization of employee's services as no longer necessary or sustainable and therefore, properly terminable, was a valid exercise of BUSINESS JUDGMENT on the part of the employer.

The determination of the continuing necessity of a particular officer or position in a business corporation is MANAGEMENT PREROGATIVE, and the courts will not interfere with the exercise of such so long as no abuse of discretion or merely arbitrary or malicious action on the part of the management is shown.

BUSINESS SERVICES OF THE FUTURE TODAY V. CA (LABOR)

FACTS: The employee was terminated on the ground of severe business losses. The employers believed however, that since the employee was also a stockholder, there was no need to notify the DOLE of the closure since as stockholder, he was presumed to have taken part in the decision to close the business.

HELD: NOTICE OF CLOSURE to the DOLE is mandatory. It allows the DOLE to ascertain whether the closure and/or dismissals were done in good faith and not a pretext for evading obligations to the employees. This requirement protects the workers' right to security of tenure. Failure to comply with the requirement taints the dismissal.

An exception is when the employee consented to his retrenchment, the required prior notice to the DOLE is not necessary as the employee thereby acknowledges the existence of a valid cause for termination of his employment. However, there is no evidence to show that the employee consented to his dismissal and for this reason, the employee should have submitted a written notice of closure to the DOLE.

The NLRC and the CA were unanimous in finding that the closure was bona fide. As in the case of Agabon, nominal damages were awarded to vindicate employee's right to due process.

FILIPINAS V. GATBALAYAN (LABOR)

FACTS: Another illegal dismissal case by the workers who were terminated due to massive retrenchment of the company to forestall serious business losses and/or closure of operations.

ISSUE: Under what circumstances does the employer become legally privileged to retrench and reduce the number of employees?

HELD: The following are general standards in terms of which the acts of employer must be appraised:

1. The losses expected should be substantial and not merely de minimis in extent.
2. The substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer.
3. It must be reasonably necessary and likely to effectively prevent the expected losses.
4. The alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proven by sufficient and convincing evidence.

To impart operational meaning to the constitutional policy of providing full protection to labor, the employer's prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means, e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving manufacturing efficiencies, trimming of marketing and advertising costs, etc.

UICHICO V. NLRC (LABOR)

FACTS: The case is an illegal dismissal case filed by workers of Crispa who were terminated on the ground of retrenchment due to alleged serious business losses suffered by the company.

HELD: The Statement of Profits and Losses submitted by Crispa to prove its alleged losses, without the accompanying signature of a CPA or without being audited by an independent auditor, is not credible. This is not the kind of sufficient and convincing evidence necessary to discharge the burden of proof required to establish the alleged losses suffered by Crispa.

The corporate directors and officers of Crispa are SOLIDARILY LIABLE with the corporation for the termination of employment done with malice or in bad faith. In this case, it is undisputed that they have a direct hand in the illegal dismissal of respondent employees.

The law employees the right of every business entity to reduce its work force if the same is made necessary by compelling economic factors which would endanger its existence or stability. In spite of overwhelming support granted by the social justice provisions of our Constitution in favor of labor, the fundamental law itself guarantees, even during the process of tilting the scales of social justice towards workers and employees the right of enterprises to reasonable returns on investment and to expansion and growth.

AGABON V. NLRC (LABOR)

FACTS: Agabon was dismissed for abandonment of work (subcontracting for another company). The court held that the cause for the dismissal was valid but the company failed to follow notice requirements. The company reasoned that it would be useless becuase the Agabons did not reside there anymore.

HELD: This is not a valid excuse because the TWIN NOTICE REQUIREMENTS are mandatory. The dismissal is upheld but the company should be held liable for nominal damages, for the violation of his right to satutory due process.

the law also recognizes the right of the employer to expect from its employees not only good performance, adequate work and diligence, but also good conduct and loyalty. The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests.

University of the Philippines, Diliman

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NEW CODE OF JUDICIAL CONDUCT FOR PHIL JUDICIARY (Promulgated 2004)

CANON 1. INDEPENDENCE

Judicial independence is a prerequisite to the Rule of Law and a fundamental guarantee of fair trial. A judge shall therefore, uphold and exemplify judicial independence in both its individual and institutional aspects.

Section 1. Judges shall exercise the judicial function independently on the basis of their assessment of the facts and in accordance with a conscientious understanding of the law, free of any extraneous influence, inducement, pressure, threat or interference, direct or indirect, from any quarter or for any reason.

Section 2. In performing judicial duties, judges shall be independent from judicial colleagues in respect of decisions which the judge is obliged to make independently.

Section 3. Judges shall refrain from influencing in any manner the outcome of litigation or dispute pending before another court or administrative agency.

Section 4. Judges shall not allow family, social or other relationships to influence judicial conduct or judgment. The prestige of judicial office shall not be used or lent to advance the public interests of others, nor convey or permit others to convey the impression that they are in a special position to influence the judge.

Section 5. Judges shall not only be free from inappropriate connections with, and influence by, the executive and legislative branches of government, but must also appear to be free therefrom to a reasonable observer.

Section 6. Judges shall be independent in relation to society in general and in relation to the particular parties to a dispute which he or she has to abdicate.

Section 7. Judges shall encourage and uphold safeguards for the discharge of judicial duties in order to maintain and enhance the institutional and operational independence of the judiciary.

Section 8. Judges shall exhibit and promote high standards of judicial conduct in order to reinforce public confidence in the judiciary which is fundamental to the maintenance of judicial independence.

CANON 2. INTEGRITY

Integrity is essential not only to the proper discharge of the judicial office but also to the personal demeanor of judges.

Section 1. Judges shall ensure that not only is their conduct above reproach, but that it is perceived to be so in the view of a reasonable observer.

Section 2. The behavior and conduct of judges must reaffirm the people's faith in the integrity of the judiciary. Justice must not only merely be done but must also be seen and done.

Section 3. Judges should take or initiate appropriate disciplinary measures against lawyers or court personnel for unprofessional conduct of which the judge may have become aware.

CANON 3. IMPARTIALITY

Impartiality is essential to the proper discharge of the judicial office. It applies not only to the decision itself but also to the process by which the decision is made.

Section 1. Judges shall perform their judicial duties without favor, bias, or prejudice.

Section 2. Judges shall ensure that his or her conduct, both in and out of court, maintains and enhances the confidence of the public, the legal profession and litigants in the impartiality of the judge and of the judiciary.

Section 3. Judges shall, so far as is reasonable, so conduct themselves as to minimize the occasions on which it will be necessary for them to be disqualified from hearing or deciding cases.

Section 4. Judges shall not knowingly, while a proceeding is before, or could come before them, make any comment that might reasonably be expected to affect the outcome of such proceeding or impair the manifest fairness of the process. Nor shall judges make any comment in public or otherwise that might affect the fair trial of any person or issue.

Section 5. Judges shall disqualify themselves from participating in any proceedings in which they are unable to decide the matter impartially or in which it may appear to a reasonable observer that they are unable to decide the matter impartially. such proceedings include, but are not limited to, instances where

(a) The judge has actual bias or prejudice concerning a party or personal knowledge of disputed evidentiary facts concerning the proceedings;

(b) The judge previously served as a lawyer or was a material witness in the matter in controversy;

(c) The judge, or a member of his or her family, has an economic interest in the outcome of the matter in controversy;

(d) The judge served as executor, administrator, guardian, trustee, or lawyer in the case or matter in controversy, or a former associate of the judge served as counsel during their association, or the judge or lawyer was a material witness therein;

(e) The judge's ruling in a lower court is the subject of review;

(f) The judge is related by consanguinity or affinity to a party litigant within the 6th civil degree or to counsel within the 4th civil degree; or

(g) The judge knows that his or her spouse or child has a financial interest, as heir, legatee, creditor, fiduciary, or otherwise, in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceedings.

Section 6. A judge disqualified as stated above may, instead of withdrawing from the proceeding, disclose on the records the basis of disqualification. If based on such disclosure, the parties and lawyers independently of a judge's participation, all agree in writing that the reason for the inhibition is immaterial or unsubstantial, the judge may then participate in the proceeding. The agreement, signed by all parties and lawyers, shall be incorporated in the record of the proceedings.

CANON 4. PROPRIETY

Propriety and the appearance of propriety are essential to the performance of all the activities of a judge.

Section 1. Judges shall avoid impropriety and the appearance of impropriety in all of their activities.

Section 2. As a subject of constant public scrutiny, judges must accept personal restrictions that might be viewed as burdensome by the ordinary citizen and should do so freely and willingly. In particular, judges shall conduct themselves in a way that is consistent with the dignity of the judicial office.

Section 3. Judges shall, in their personal relations with individual members of the legal profession who practice regularly in their court, avoid situations which might reasonably give rise to the suspicion or appearance of favoritism or partiality.

Section 4. Judges shall not participate in the determination of a case in which any member of their family represents a litigant or is associated in any manner with the case.

Section 5. Judges shall not allow the use of their residence by a member of the legal profession to receive clients of the latter or of other members of the legal profession.

Section 6. Judges, like any other citizen, are entitled to freedom of expression, belief, association and assembly, but in exercising such rights, they shall always conduct themselves in such a manner as to preserve the dignity of the judicial office and the impartiality and independence of the judiciary.

Section 7. Judges shall inform themselves about their personal fiduciary financial interests and shall make reasonable efforts to be informed about the financial interests of members of their family.

Section 8. Judges shall not use or lend the prestige of the judicial office to advance their private interests, or those of a member of their family or of anyone else, nor shall they convey or permit others to covey the impression that anyone is in a special position improperly to influence them in the performance of judicial duties.

Section 9. Confidential information acquired by judges in their judicial capacity shall not be used or disclosed by, for any other purpose related to their judicial duties.

Section 10. Subject to the proper performance of judicial duties, judges may

(a) Write, lecture, teach, and participate in activities concerning the law, the legal system, the administration of justice or related matters;

(b) Appear at a public hearing before an official body concerned with matters relating to the law, the legal system, the administration of justice or related matters;

(c) Engage in other activities if such activities do not detract from the dignity of the judicial office or otherwise interfere with the performance of judicial duties.

Section 11. Judges shall not practice law whilst the holder of judicial office.

Section 12. Judges may form or join associations of judges or participate in other organizations representing the interests of judges.

Section 13. Judges and members of their families shall neither ask for, or accept, any gift, bequest, loan or favor in relation to anything done or to be done or omitted to be done by him or her in connection with the performance of judicial duties.

Section 14. Judges shall not knowingly permit court staff of others subject to their influence, direction or authority, to ask for, or accept any gift, bequest, loan or favor in relation to anything done or to be done or omitted to be done in connection with their duties of functions.

Section 15. Subject to law and to any legal requirements of public disclosure, judges may receive a token gift, award, or benefit as appropriate to the occasion on which it is made provided that such gift, award of benefit might not reasonably be perceived as intended to influence the judge in the performance of judicial duties or otherwise give rise to an appearance of partiality.

CANON 5. EQUALITY

Ensuring equality of treatment to all before the courts is essential to the due performance of the judicial office.

Section 1. Judges shall be aware of, and understand, diversity in society and differences arising from various sources, including but not limited to race, color, sex, religion, national origin, caste, disability, age, marital status, sexual orientation, social and economic status and other like causes.

Section 2. Judges shall not, in the performance of judicial duties, by words or conduct, manifest bias or prejudice towards any person or group on irrelevant grounds.

Section 3. Judges shall carry out judicial duties with appropriate consideration for all persons, such as the parties, witnesses, lawyers, court staff and judicial colleagues, without differentiation on any irrelevant ground, immaterial to the proper performance of such duties.

Section 4. Judges shall not knowingly permit court staff or others subject to his or her influence, direction or control to differentiate between persons concerned, in a matter before the judge, on any irrelevant ground.

Section 5. Judges shall require lawyers in proceedings before the court to refrain from manifesting, by words or conduct, bias or prejudice based on irrelevant grounds, except such as are legally relevant to an issue in proceedings and may be the subject of legitimate advocacy.

CANON 6. COMPETENCE AND DILIGENCE

Competence and diligence are prerequisites to the due performance of judicial office.

Section 1. The judicial duties of a judge take precedence over all other activities.

Section 2. Judges shall devote their professional activity to judicial duties, which include not only the performance of judicial functions and responsibilities in court and the making of decisions, but also other tasks relevant to the judicial office or the court's operations.

Section 3. Judges shall take reasonable steps to maintain and enhance their knowledge, skills, and personal qualities necessary for the proper performance of judicial duties, taking advantage for this purpose of the training and other facilities which should be made available, under judicial control, to judges.

Section 4. Judges shall keep themselves informed about the relevant developments of international law, including international conventions and other instruments establishing human rights norms.

Section 5. Judges shall perform all judicial duties, including the delivery of reserved decisions, efficiently, fairly, and with reasonable promptness.

Section 6. Judges shall maintain order and decorum in all proceedings before the court and be patient, dignified, and courteous in relation to litigants, witnesses, lawyers, and others with whom the judge deals in an official capacity. Judges shall require similar conduct of legal representatives, court staff and others subject to their influence, direction and control.

Section 7. Judges shall not engage in conduct incompatible with the diligent discharge of judicial duties.